The European Commission issued an announcement on August 31 that the EU decided not to extend the anti-dumping and countervailing measures against solar panels in China after it expired on September 3.

 

The European solar market will resume free trade, and China's domestic PV production capacity will be positive. The industry generally believes that the past "MIP" has limited the competitiveness of China's domestic production capacity. With the realization of free trade, China's domestic PV production capacity will increase in Europe.

 

The domestic subsidy intensity for the photovoltaic industry has also begun to gradually decrease. On May 31 this year, the three ministries and commissions jointly issued the "Notice on Matters Related to Photovoltaic Power Generation in 2018" (the industry called "531 New Deal"), which clearly stated that the scale of the construction of ordinary photovoltaic power plants in 2018 will not be arranged, and only 10 million will be arranged. The scale of distributed photovoltaic construction of about kW further reduces the subsidy intensity of photovoltaic power generation. For the "531 New Deal," the photovoltaic industry has vividly called it a "weaning". Under the new situation of strictly controlling the scale and lowering the price of electricity, the photovoltaic industry has rapidly entered the cold winter period.

 

We believe that in the past few years, China's PV industry was in a period of barbaric expansion. As the new energy policy continued to become the focus of market capital speculation, a large number of enterprises began to expand their production capacity or cross-industry to produce photovoltaic products, resulting in a certain degree. Inefficient and fierce market competition. This also forced the country to start supply-side reforms in the photovoltaic industry by lowering the scope of subsidies by raising industry standards.

 

From the perspective of the industry, the prosperity of the photovoltaic industry has also shown a significant downward trend since 2018. Especially after the introduction of the New Deal in May, the PV profit index of the whole industry has dropped significantly. The EU's termination of "double opposition" is expected to enhance the certainty of overseas demand. The performance of PV companies with overseas layout will increase, and the domestic PV industry chain that is under the policy of "severe winter" will be boosted.

 

Pacific Securities believes that with the termination of the EU MIP, it will benefit domestic exports in the long run. On the whole, the decline in demand in China and other markets has brought a big impact on global demand. This year's PV market competition will be unprecedentedly fierce. The industry is currently in a relatively low state, but due to the acceleration of the parity time node, the industry is expected to be at the end of the year or An inflection point will be ushered in early next year. Long-term optimistic about the double improvement of the profit margin and market share of leading companies after shuffling. It is recommended to focus on the subject: Longji (601012.SH), Tongwei (600438.SH), Sunshine Power (300274.SZ), Zhengtai Electric (601877.SH).